Preparing for Red Diesel Rebate Changes

Only the following sectors remain eligible to use red rebated diesel from April 2022:   

• Agriculture, forestry, horticulture, and fish-farming   

• Rail transport   

• Fuel used for non-commercial purposes – heating & power generation   

• Community amateur sports clubs (CASC) and golf courses   

• Sailing, boating & marine transport (excluding private pleasure craft in Northern Ireland) •  Travelling fairs & circuses

“Those no longer able to use rebated fuels will have to use diesel or biofuel on which the full duty has been paid.”   As yet, there is no finalised legislation document and, with the changes due to come into effect in April 2022, businesses have little time to be fully prepared despite the inevitable significant financial impact. There is absolutely no doubt that those forced to stop using red diesel will feel the financial strain. Jumping from 11.14 pence per litre for red diesel to 57.95 pence for white diesel is a hefty and noticeable jump. For a business using 150,000 litres of diesel per year, that’s a staggering annual increase of £70,215. 

Cash flow and Credit Account Facilities will all have to be taken into consideration, as many suppliers do not offer credit facilities for Derv or Derv Substitutes due to high cost and approx. 3% profit margins demanded by the market.

“It might be tempting for current users of red diesel to stock up and future proof themselves for the next few years. However, fuel suppliers cannot:

•       Agree to customers stockpiling fuel

•       Agree to customers increasing usual order quantities

•       Sell large volumes of red diesel just before the cut-off date.”


Pink diesel:

The need for correct tank cleaning has never been higher. Sites, including the depot storage   tanks of fuel oil suppliers, must be cleaned to remove all residue of red fuel. Not doing so could result in   ‘pink’ diesel – a mix of white and leftover red diesel. “Ensuring that all dye residue and contamination on tank   walls has been removed will be incredibly important as “putting clean fuel into a dirty tank will only speed up   the contamination process and deterioration of fuel – best practice is to maintain the cleanliness of your tank   both before and after a fuel delivery.”

Many people are looking to HVO as a fuel alternative: Despite HVO being a synthetic diesel alternative, it is   classified as a fossil fuel and will therefore be eligible for the full rate of duty. Many may think that this newer,   ‘cleaner’ fuel cannot fall victim to the same contamination problem found in diesel fuel storage – but it can  

Fuel stores will be a valuable target: 

The changes to red diesel entitlement mean that many businesses will also have to consider a higher level   of protection for their fuel: “Switching over to white diesel is going to turn your fuel supply into liquid gold.   Just like you wouldn’t leave your car unlocked overnight, you need to keep your stored fuel protected. Fuel   tanks, particularly those above ground, at remote locations or unmanned sites, are prime targets for thieves.”  As a result, a fuel management system is something that many will now need to consider with the anti-theft   monitoring, fuel condition monitoring and fuel level monitoring such a system affords.

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